Luxury-goods maker Burberry posts £427.8 million pre-tax profit

The UK's largest luxury-goods maker, Burberry Group Plc, posted full-year profit that topped estimates, thanks to strong demand in China and Hong Kong, and hiked dividend more than the expectations of analysts.

Burberry closed the year with pretax profit higher 14 per cent at £427.8 million as against analysts' expectations of £417 million.

Demand for luxury goods in China boosted sales growth at the company, which has so far has shrugged aside signs of a slowdown in the industry. LVMH Moet Hennessy- Louis Vuitton SA last month reported the slowest growth in fashion and leather-goods revenue in over three years, while Prada SpA's figures came as a disappointment to analysts.

According to analysts, the luxury retailer had had considerable success in leveraging international markets as it rapidly expanded presence in growth areas such as China.

A dividend for the year of 29 pence a share comes as a 16 per cent increase over the previous year. The company's shares rose as much as 2.7 per cent to 1,503 pence in London trading, the highest since 4 May. The year has seen the stock rise 21 per cent with the company valuation at £6.6 billion.

Revenue in Asia Pacific, its largest region with 35 per cent of sales, was up 13 per cent, on surging demand for its more expensive products in China and Hong Kong. Sales rose 20 per cent in China, which accounts for 14 per cent of Burberry's retail and wholesale revenue after the opening of 11 stores in the country.

The group's strong showing comes after a profit warning last September as sales slowed down in China. According to Burberry, profit for the first half of its new fiscal year would be less than last year's with the focus shifting from wholesale markets – sales through non-Burberry stores – to high-growth Latin American and Asian retail sales from Burberry-branded stores. Retail sales now make up 71 per cent of Burberry revenue.

First-half profit for the six months to the end of September last year stood at £173 million.

According to the group, it was aiming for a modest increase on the 17.1 per cent adjusted operating margin achieved in the full year, which it expected to come in the second half of the year when it should generate higher revenues than in the first.

The group has plans for opening of 10 Burberry stores in its new fiscal year, with three larger format stores in Shanghai to serve local customers and domestic tourists.

The luxury brand also opened four stores in Brazil and signed franchise agreements in Colombia, Chile and Barbados.